HP 2007 Annual Report Download - page 80

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
4.75% per annum (the “Mercury Notes”). As of July 31, 2007, we had repurchased or repaid at maturity all of the Mercury
Notes.
In May 2006, we filed a shelf registration statement (the “2006 Shelf Registration Statement”) with the Securities and
Exchange Commission (the “SEC”) to enable us to offer and sell from time to time, in one or more offerings, debt securities,
common stock, preferred stock, depositary shares and warrants. On May 23, 2006, we issued $1.0 billion in floating rate
global notes due May 22, 2009 under the 2006 Shelf Registration Statement that we redeemed in June 2007.
On February 22, 2007, we issued an additional $2.0 billion of global notes under the 2006 Shelf Registration Statement.
The global notes included $600 million of notes due March 2012 with a floating interest rate equal to the three-month USD
LIBOR plus 0.11% per annum, $900 million of notes due March 2012 with a fixed interest rate of 5.25% per annum and
$500 million of notes due March 2017 with a fixed interest rate of 5.40% per annum. We issued the $600 million notes at par
and the $900 million notes and $500 million notes at discounts to par at 99.938% and 99.694%, respectively. We used the net
proceeds from these note offerings for general corporate purposes, including funding the repurchase of the Mercury Notes as
described above and repaying short-term commercial paper.
On June 12, 2007, we issued an additional $2.0 billion of global notes under the 2006 Shelf Registration Statement. The
global notes included $1.0 billion of notes due June 2009 with a floating interest rate equal to the three-month USD LIBOR
plus 0.01% per annum, and $1.0 billion of notes due June 2010 with a floating interest rate equal to the three-month USD
LIBOR plus 0.06% per annum. We issued these global notes at par. We used the net proceeds from these offerings for
general corporate purposes, including the redemption of the floating rate global notes due May 22, 2009 as described above
in June 2007 and the repayment of short-term commercial paper.
On December 17, 2007, we repaid $50 million Series A Medium-Term Notes due December 2007 at maturity.
We have a $3.0 billion U.S. credit facility expiring in May 2012. This credit facility is a senior unsecured committed
borrowing arrangement that we put in place primarily to support our U.S. commercial paper program. Our ability to have a
U.S. commercial paper outstanding balance that exceeds the $3.0 billion committed credit facility is subject to a number of
factors, including liquidity conditions and business performance.
Our credit risk is evaluated by three independent rating agencies based upon publicly available information as well as
information obtained in our ongoing discussions with them. Standard & Poor’ s Ratings Services, Moody’ s Investors Service
and Fitch Ratings currently rate our senior unsecured long-term debt A, A2 and A+ and our short-term debt A-1, Prime-1 and
F1, respectively. We do not have any rating downgrade triggers that would accelerate the maturity of a material amount of
our debt. However, a downgrade in our credit rating would increase the cost of borrowings under our credit facilities. Also, a
downgrade in our credit rating could limit our ability to issue commercial paper under our current programs. If this occurs,
we would seek alternative sources of funding, including through drawdowns under our credit facility or the issuance of notes
under our existing shelf registration statements and our Euro Medium-Term Note Programme.
We have revolving trade receivables-based facilities permitting us to sell certain trade receivables to third parties on a
non-recourse basis. The aggregate maximum capacity under these programs was approximately $525 million as of
October 31, 2007. We sold approximately $2.2 billion of trade
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